Sunday, March 07, 2010

Real Estate Blog - Real Estate in Las Vegas - What is Included in the Contract

Real Estate Blog - Real Estate in Las Vegas - What is Included in the Contract

Real Estate in Las Vegas - The Buying Process

Every country, state and city has different procedures when it comes how a real estate transaction is handled. Below is an overview of how the Las Vegas real estate purchase process is handled.

  1. Obtain a loan preapproval from a major bank or provide proof of funds (bank statements) for an all cash sale to your Las Vegas real estate agent. This is required before submitting any offers on properties, and some sellers will not allow you to view their property without one.
  2. Identify potential Las Vegas homes for sale that meet your needs and view them with your agent. Remember to give your agent as much advance notice as possible. Many properties require appointments to view, and if you can give at least a week's notice it is easier to make sure you get to see all properties on your list.
  3. Select property that you would like to make an offer on. Because there are multiple offers on many properties, especially those under $400k, it is wise to select several properties and not just one.
  4. Have your agent run comparable sales to determine an approximate value. If you are getting a loan, your lender will also require an official appraisal to be done on the property. If this is a cash sale, an appraisal is not required, but the buyer may pay for one and that can be a condition of the contract. We use the standard Greater Las Vegas Board of Realtors purchase contract which contains many provisions for the protection of both the buyers and the sellers. The only exception to using a standard GLVAR contract would be when purchasing a brand new Las Vegas homes from a developer. In that case the purchase contract is supplied by the developer.
  5. The agent will write up a purchase contract including all terms of the sale. The buyer will sign the contract and the agent will submit it to the listing broker along with a copy of the earnest money deposit check or a notation that these funds will be wired directly to the escrow company within one business day.
  6. The seller then has three choices: they can accept the contract as written, they can reject the contract, or they can make a counter offer to the buyer.
  7. If the seller makes a counter offer, the buyer can accept it, reject it or make another counter offer to the seller. All offers and counter offers must be in writing. Verbal offers are not acceptable.
  8. Once all parties have reached agreement in writing, the contract is considered accepted. The buyer's agent will submit all documents and the earnest deposit check to the escrow company and escrow will be opened. Once again, the earnest deposit will be cashed at this time and the funds will remain at the escrow company until the closing occurs.
  9. The buyer's Las Vegas mortgage lender will also immediately receive an executed copy of the contract so that they may start processing the loan.
  10. The lender should be instructed to order the appraisal immediately and collect funds for the appraisal from whoever is paying for it.
  11. The property inspection should also be set up immediately so that the results can be reviewed and accepted or rejected by the buyer during the due diligence period. Should there be items on the inspection list that the buyer wishes to have fixed by the seller, a separate form will be prepared itemizing those items. Keep in mind that Las Vegas foreclosures and short sales are mostly sold "as is, where is" with no repairs to be made. Short sale sellers have no money, and Banks will very seldom pay for any inspection items unless a major issue is found like mold or a structural defect.
  12. HOA docs should be ordered immediately so that the buyer can review them in a timely fashion within the due diligence period.
  13. The buyer should also immediately contact their preferred homeowner's insurance company and order a homeowner's policy. The buyer will need to supply the property address, the property square footage and both the lender' and escrow company's contact information so that the insurance company can provide them with the necessary paperwork for closing.
  14. Once the items of the due diligence period have been covered and the due diligence period ends, the buyer's earnest deposit is considered non refundable unless the seller is unable to provide clear title to the property or the property is materially damaged in some way prior to the closing.
  15. About three days prior to the closing, the buyer will have an opportunity to "walk through" the home once more to make sure that the property is still in the same condition as it was when the offer was tendered. Also if there were repairs that were to be made by the seller, the buyer would check to make sure that those repairs have been done. If the buyer is unable to be at the property for the walk through, the buyer may nominate someone else in writing to perform this walk through on the buyer's behalf. The real estate agent may be present during the walk through, but CANNOT do the walk through for the buyer. If the buyer or a buyer's nominee cannot do the walk through, the buyer will need to waive his rights to the walk through in writing.
  16. About three days before closing, the buyer will sign all the closing documents and lender documents, if applicable. The escrow company will have prepared an estimated HUD settlement statement outlining all fees being charged and this will be reviewed for accuracy by the buyer and the buyer's agent. The lender documents will be returned to the lender for review, and then the lender will wire mortgage funds to the escrow company. The buyer will deposit the remaining funds needed to close by WIRE TRANSFER only. Escrow companies will not accept cashier's checks as "good" funds. If a cashier's check is used, the escrow company will wait five to ten days for the check to clear. This will delay closing and may result in fees and penalties to the buyer.
  17. About three days before closing the buyer will call the utility companies to have the utilities turned on in their name at the close of escrow date.
  18. Once the property is officially recorded in the buyer's name at the Clark County Recorder's office, the buyer is obtains access to the property and keys from the seller. Prior to recording, no work may be done on the property by the buyer and no furnishings may be installed without prior written permission from the seller. (Bank owned properties never allow any kind of access prior to recording.)
  19. Recording a property on the specified closing date is not an exact science, though we do everything we can to accomplish this goal. Some of the most common delays are: the HOA does not return the demands to escrow on time, the seller does not sign off on the final HUD statement, the loan documents need to be resigned because of a clerical error, escrow is waiting on the lender funds, final repairs have not been made, or title needs to clear a lien. These are all items outside of the control of the buyer or the buyer's agent, and a sense of humor helps to get through the process.

For non US Citizens: the above process for purchasing Las Vegas homes is the same for US and non US Citizens. One other item that foreign nationals need to be aware of when purchasing property in the United States: when you eventually sell the property, a certain percentage of any profit over the original sales price will be withheld at the closing to pay US federal taxes.

Taking title to property as an LLC or Corporation: it is possible to take title to a property in the name of a US registered Corporation or LLC if you are paying cash for a property, but the purchase contract must contain this information when it is presented to the seller. Most sellers will not sign a contract that allows an assignee to take over the contract. You must also provide your real estate agent with the appropriate documentation proving you are authorized to sign for that entity. Otherwise you will have to wait until after the transaction is closed and then transfer the property into the entity's name, at which time you would be subject to the applicable Nevada transfer tax for that change of title. If you are transferring title to a trust containing the names of the principals, transfer tax is not required.